The Palms agrees to pay $1 million to settle drug, prostitution charges

An exterior view of the Palms on Sunday, Jan. 15, 2012.

Two men arriving at the Moon Nightclub last March asked an employee to help them find women willing to have sex with them.

Cost wasn't a concern, the customers said. The nightclub host complied. The cost to the Palms Casino Resort will be more than $1 million in fines and fees to the Nevada Gaming Control Board.

The men being offered prostitutes and drugs by nightclub hosts, security guards and bottle runners turned out to be undercover officers. The Gaming Control Board today detailed the activity in a 17-count complaint involving Moon, the former Rain and Ghostbar nightclubs, along with the Ditch Fridays pool parties.

The Palms has agreed to pay the fines, while overhauling its security staff and club operations.

"We are deeply concerned and disappointed about the matters outlined in the complaint as they are not consistent with the values of our company and Nine Group nor do they demonstrate the environment we want and intend to provide for our employees, guests and community, and we are resolved to address these problems comprehensively and decisively," the Palms said in a statement.

The incidents in the complaint happened before the Palms took over ownership of the Nine Group, which manages nightlife, restaurants and the pools at the casino. Resort officials said the change allows the Palms greater control over employees in the clubs and its pool.

"Nonetheless, Palms as a Nevada gaming licensee accepts full responsibility for all activities taking place on its property," casino officials said.

Among allegations in the complaint:

A bottle runner at Rain offered to supply one of the undercover officers with as much as a pound of cocaine for $18,000. Authorities also reported purchasing Ecstasy and prescription painkillers inside the clubs.

Security guards at Moon supplied a private room in the club when one of the officers asked for a place do the drugs. Other security details at Ditch Fridays stood watch outside a poolside cabana to protect customers they believed were doing drugs. One undercover officer paid a security guard $100 to provide a room to take drugs.

On another night in April, a woman at Moon negotiated sexual favors with one of the officers for around $2,000.

"This constitutes an unsuitable method of operation, and as such is grounds for disciplinary action," the Gaming Control Board said in the complaint.

For its part, the Palms has agreed to pay $1 million in fines and reimburse the state $78,000 in investigation fees.

The casino also agreed to implement steps to prevent future infractions, including:

• Drug testing for employees.

• Disbanding the security unit at the nightclubs. It will be replaced by Palms security guards.

• Enact an employee whistleblower hotline.

• Use “mystery shopper” services and “amnesty boxes" at club entrances. "These boxes allow patrons to dispose of any contraband without fear of reprisal prior to entering the clubs and the contents are then disposed by Metro (Police)," accordion to the casino.

Those plans should be in place by the end of the month.

"We believe that the actions taken … in response to the allegations … not only convey our commitment to resolving the GCB's complaint, but also our commitment to guarding against this happening on our property again," the Palms statement said. "We will continue to work with Nine Group to create a community at Palms that supports a casino-resort experience of unparalleled quality, safety and enjoyment.”

The Nevada Gaming Commission must approve the settlement.

The Palms had been in the process of renovating the resort with plans to rebuild its nightclub operations this year.

The case comes about two years after the Hard Rock Hotel paid $650,000 over similar allegations.

State gaming authorities have sent numerous warnings since 2006 and supplied training for managers on preventing illegal activities in Las Vegas nightclub and pools.

Tags: Business


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  1. $1 Million fine is chump change. The Gaming Board should force the Palms to shut the clubs down for a year. That would send a message up and down the strip operators to police their club operations! Otherwise it will be back to business as usual for these joints!

  2. Chunky says:

    He finds it quite interesting that the Palms is fairly well known in the production world for renting out suites for music videos and television production while turning a blind eye to open consumption of drugs!

    Obviously there was a price on everything there!

    That's what Chunky thinks!

  3. Drugs and prostitution in Las Vegas. My God! What is this world coming to?

    If you don't like whores and drugs move to Utah.